Apple downside pressure eases

Market Review

Yesterday’s session was not an eventful one as the data calendar was close to being empty, with only very low importance releases hitting the wires at 1500BST. The Nasdaq was somewhat nervous as its 12% component, Apple, was about to unveil its newest flagship(s) at the annual product launch in Cupertino which would be its main revenue driver. Safe to say if the company failed to deliver, the Nasdaq may see an extended downside of the coming weeks or even months – but more about the launch in the section below. Cable was contained within a tight range, which can be seen as surprising due to the recent events. A popular strategy for traders and fund managers that has taken hold is to go short cable until the vote, where the plan is to take most off and replace with put options in the case of an extended move lower. In terms of the Ukrainian situation there were developments on the sanctions side where they were issued but placed on hold immediately, and the hold to be lifted should the ceasefire not hold firm. There was no strategy report issued yesterday.

Today's Fundamental View

This morning have seen the EURUSD and Cable in ranges, albeit being adversely correlated. Equities have seen some upside, with the outperformer being the Nasdaq in the late morning hours as Comcast has lead the index higher as well as Apple downside pressure has eased somewhat with investors coming to terms with the new products are actually just the same products as any other technology company may have; a processor, storage, screen and a camera. We would not urge investors to short the company just now the cult base is likely to purchase both the Apple Watch as well as a bigger screened iPhone which may add to the bottom line, though shorts should most certainly be implemented about a month after the next earnings report or perhaps after Christmas as those that are not Apple-maniacs will merge more towards equal products from other vendors with a junior price tag attached to it. It will be worth taking an extra look at the payment system with the iPhone, but despite it may even be “ground-breaking” and there has been made deals with several banks, we believe this for now not to be too significant for Apple’s bottom line. Despite wasting $2 billion on a low tech game which soon enough will be out of favour, Microsoft seems to be a favourite to investors pre-market, and is up 0.62%. Stocks are otherwise difficult to judge today as they have been pulling off the all time high despite lower pressure in the geo-political sphere of influence, which may indicate the current rally is coming to an end. Despite this we will go with a long strategy today. With Crude oil we recognise the downward pressure, but as we technically can argue mid range on a weekly chart we will go forward with a long strategy. On Brent it is currently possible to take advantage of forward contango where traders can buy crude on the spot market and immediately sell it as a forward contract with a profit. This has led many speculators to buy storage units of various kinds for delivery in the future, and we speculate if enough oil is being taken off the market we may even see a push up before we see a short term flooding. For these reasons and a complete disbelief that Russia will adhere to the ceasefire until they have it as they like we see the the upward risk being greater than downward. We remain bullish on the USD, though see T-Notes selling off.

Alternative View

Any geo-political risk should be carefully analysed, with continued focus on Ukraine. The price of Apple may serve as a key indicator to index movement today..